Canada’s housing affordability crisis continues to deepen, extending beyond traditional hotspots like Toronto and Vancouver to include major cities such as Montréal, Ottawa, and Halifax. While conditions have shown slight improvement nationally since the peak of the crisis in the second quarter of 2022, the underlying erosion of affordability has been a decades-long trend, dating back to the early 2000s.
A new index published by the Canada Mortgage and Housing Corporation (CMHC) highlights the growing challenges faced by Canadians seeking to buy or rent a home. The CMHC Housing Affordability Composite Index, launched this week, provides a more holistic view of the issue than many existing measures, which often focus solely on homeownership or a single indicator. The index considers not only housing costs but also income levels and discretionary spending, as well as the interplay between the rental and ownership markets.
The report indicates that Montréal is increasingly facing affordability pressures comparable to those in Toronto and Vancouver, though the latter two remain the most challenging markets in the country. This shift reflects a broader trend of affordability issues spreading across Canada, impacting a wider range of cities and residents.
Rental Market Remains Strained
The rental market, in particular, continues to be a significant concern. The CMHC notes that affordability in Montréal’s rental market has deteriorated in 2025, with no signs of stabilization. This is in contrast to the homeownership market, where some improvements have been observed. Rising rents are forcing many Canadians to adapt their living arrangements, with young adults increasingly staying with family or sharing accommodations with roommates to manage costs, according to a recent study from the University of British Columbia.
The UBC study, published in The History of the Family, examined household formation trends from 1981 to 2021. It found that in cities with soaring rents, like Toronto and Vancouver, the number of young adults establishing independent households has declined. Conversely, cities with more stable rental costs, such as Quebec City and Montreal, have experienced more consistent household formation rates. This suggests that the availability of affordable rental options plays a crucial role in enabling individuals to live independently.
Homeownership Affordability Shows Signs of Improvement, But Remains Below Historical Levels
While the situation in the rental market remains precarious, the CMHC index suggests a modest improvement in homeownership affordability since 2024. Prices are showing signs of stabilization, and this trend is expected to continue. However, the agency emphasizes that affordability still needs to improve significantly to return to levels seen before the pandemic. The index peaked in the second quarter of 2001, and has experienced three distinct waves of erosion since then: from 2001 to 2007, from 2015 to 2020, and from 2020 to 2023.
Land Use Policies as a Key Driver
A recent report by Demographia International Housing Affordability 2025, authored by Wendell Cox and published by the Urban Reform Institute and the Frontier Centre for Public Policy, identifies land-use policies as a major contributor to the housing affordability crisis. The report, which analyzes 95 major housing markets in eight countries, found that Canada’s national median multiple – the ratio of median house prices to gross median household income – stands at 5.4, placing the country in the “severely unaffordable” category.
Vancouver ranks as the fourth least affordable market globally (with a median multiple of 11.8), behind only Hong Kong, Sydney, and San Jose. Toronto (8.4) and Montreal (5.8) are also classified as severely unaffordable. Calgary (4.8) and Ottawa-Gatineau (5.0) fall into the “seriously unaffordable” range, while Edmonton (3.7) is the most affordable of the six Canadian markets surveyed, categorized as “moderately unaffordable.” The report specifically points to restrictive land-use policies, such as greenbelts and urban growth boundaries, particularly in British Columbia and Ontario, as exacerbating the problem.
Public Support for Rent Control Measures
Growing public concern over housing affordability is reflected in a recent Léger poll conducted for Québec solidaire. The poll reveals that 85% of Quebec residents support measures to limit rent increases, specifically by linking them to inflation. This indicates a strong desire for government intervention to address the rising cost of housing and protect tenants.
The Canadian housing affordability crisis is a complex issue with no easy solutions. While some signs of improvement are emerging in the homeownership market, the rental market remains a significant challenge. Addressing the crisis will require a multifaceted approach, including policies that promote increased housing supply, address restrictive land-use regulations, and provide support for renters. The continued spread of affordability challenges beyond traditional hotspots underscores the need for a national strategy to ensure that all Canadians have access to safe, affordable housing.
